The cost of compensating people with an asbestos-related chest condition has been significantly underestimated by the Scottish Government, according to insurers.

Ministers had estimated that the cost of compensating those with pleural plaques - scar tissue on the lung commonly caused by occupational exposure to asbestos - would cost £6.5m a year in 2015, and £5.5m the year before.

But the Association of British Insurers (ABI) has claimed that the annual cost could be as much as £607m - with the total bill potentially reaching more than £8bn.

The Scottish Parliament, Justice Committee yesterday published a report on the Damages (Asbestos Related Conditions) Bill, proposed by the Scottish Government to provide compensation to sufferers.

MSPs on the influential committee agree the government may have under estimated the costs, but also believe the insurers figures are a significant over-estimation.

Fergus Ewing, Community Safety Minister, told the committee it would need £17.1m to close existing cases with a further £5.5m needed annually to settle an anticipated 200 cases a year at a cost of £25,000 each. However, the ABI said costs would be far higher.

Many more people will come foreard following the new legislation

It argued: "The Scottish Government has significantly underestimated the level of unjustified costs that the bill will impose on defendant businesses, local authorities and insurers.

"Figures from the UK Government suggest that the annual cost in Scotland would be between £76m and £607m and the total cost between £1.1bn and £8.6bn."

A spokesman for the ABI said it was opposed to the bill on the grounds that you would not need to have suffered to claim compensation, but only to have been exposed. Their argument is based on an assumption that many more people will come forward following the new legislation.

They also agree with the House of Lords judgment that those with pleural plaques do not merit compensation as they have suffered no harm, despite it being an indicator of lung damage and can be a precursor of mesothelioma.

Nick Starling, director of general insurance at the ABI, suggested as many as one in 10 adults could have pleural plaques through exposure to asbestos giving the potential cost of £607m a year.

Dominic Clayden, director of technical claims at Norwich Union, drew parallels with the British Coal pulmonary disease scheme. He said 150,000 claims were expected, but by the scheme's closure there were almost 600,000.

He said: "That happened despite the availability of data that we have in relation to pleural plaques."

However, Thompson's Solicitors who have handled many of the claims in Scotland, said their estimate is 200 a year. Solicitor Frank Maguire said: "That has always been the rate. If the House of Lords decision had not gone the way it did, I have no doubt that the rate would have continued in the coming years." The Scottish Government introduced the bill in June this year, following the Lords' ruling, to ensure people north of the border could continue to make claims.

The Justice Committee recommended support for the bill, but expressed concern about the potential financial implications.

Research has shown that about one-third to one-half of those occupationally exposed to asbestos will have calcified pleural plaques 30 years after first exposure.